Direct VAT refund available to nonresident EU taxpayers VAT-registered in Italy

On 20 May 2021, the Italian tax authorities issued a public reply (reply n. 359) to a tax ruling stating that an EU-resident company not resident in Italy can request a VAT refund through the electronic portal procedure—the “direct refund procedure”—if it is VAT-registered in Italy or has appointed a tax representative in Italy.

The direct refund procedure will be available where (i) the purchase invoices for which a refund is requested include a nonresident company’s name and a foreign VAT number; (ii) the non-Italian resident EU entity has not carried out any sales transactions for which it is liable for VAT in Italy; and (iii) the entity does not report these purchase invoices in the annual VAT return filed by its Italian tax representative in which it claims a VAT refund under the "ordinary" procedure (as provided for in article 38-bis of the Italian VAT Decree).

The reply aligns the Italian tax authorities’ position with the Italian Supreme Court's decision No. 21684 of 8 October 2020 and the Court of Justice of the European Union decisions (C-323/12) of 6 February 2014 and (C-242/19) 11 June 2020.

According to the tax authorities’ reply, VAT refund requests through the EU electronic portal refer to:

Purchase invoices that include the EU VAT registration number of the nonresident EU company (therefore, the taxpayer cannot use the portal to reclaim VAT related to purchase invoices that include an Italian VAT registration number); and
Purchase invoices that are not included in the periodic VAT settlements and in the annual return submitted by the Italian tax representative.

If the non-Italian, EU resident company prefers to apply for an “ordinary” refund in the Italian annual VAT return for VAT related to purchase invoices containing a foreign VAT number, the tax representative must keep those transactions separate from transactions where the invoices contain an Italian VAT number, record them in different VAT purchase registers and declare them in a separate form in its annual VAT return.

Francesco Grandolfo
francesco.grandolfo@bdo.it